Bloomberg News

Rupiah Weakens, Thai Stocks Fall After Indonesian Quake

April 11, 2012

Indonesia’s rupiah fell to its lowest level in almost three weeks and Thai stocks slumped after northwestern Indonesia was hit by a magnitude 8.7 earthquake that prompted tsunami warnings across parts of Asia.

Indonesia’s rupiah weakened 0.2 percent to 9,205 per dollar after strengthening 0.4 percent before the quake. It touched 9,208, the weakest level since March 23. Thailand’s benchmark SET Index sank 1 percent to a one-month low of 1,154.49. Tin for delivery in three months in London gained 0.1 percent to $22,773 a metric ton, after falling 1.4 percent today, on speculation output from Indonesia, the world’s largest exporter, will be disrupted.

The earthquake struck off Indonesia’s Sumatra island, the U.S. Geological Survey said today, prompting residents to flee to higher ground as Indonesia, India and Thailand issued tsunami warnings. More than 220,000 people were killed in 12 countries after a magnitude-9.1 earthquake off Sumatra in 2004 unleashed waves that destroyed coastal areas around the Indian Ocean.

“The market will surely be concerned about the impact,” said Putu Andi Wijaya, a Jakarta-based foreign-exchange dealer at PT Bank Rakyat Indonesia. “The tsunami is still a warning, so we haven’t seen the entire reaction yet. We still don’t know the extent of the damage.”

Indonesia’s 4.875 percent dollar bonds maturing in May 2021 fell after the news. Its yield climbed one basis point to 3.77 percent, Royal Bank of Scotland Group Plc prices show. The yield on 7 percent rupiah-denominated notes due May 2022 rose three basis points, or 0.03 percentage point, to 5.97 percent, according to the Inter-Dealer Market Association. That’s the highest level since March 16.

Full Reaction

News of the quake emerged about 15 minutes before Indonesian stock trading ended at 4 p.m. local time. The Jakarta Composite Index (JCI) was little changed afterward before paring losses in the final minute of trade. It ended the day 0.5 percent lower at 4,130.01.

“The quake happened at closing time, so we haven’t seen the full reaction yet,” said Artanavaro Gasali, Jakarta-based head of global markets at PT Bank ICBC Indonesia. “If the quake’s impact is seen as significant to the economy like last time then there will be a significant reaction in the market.”

Central Plaza Hotel Pcl (CENTEL), Thailand’s biggest hotel operator by market value, slumped 4.1 percent. Laguna Resorts & Hotels Pcl (LRH), which operates hotels in the coastal province of Phuket, sank 2.4 percent. Thailand’s airport operator temporarily closed Phuket’s international airport as a precaution following the quake.

Weaker Sentiment

The nation’s SET Index has slumped 4.7 percent since April 3, when valuations rose to the highest relative to the MSCI Asia Pacific Index in three months. The SET trades for 12.1 times estimated profit, a 4 percent discount to the Asian gauge’s multiple of 12.6.

“The tsunami report has further weakened investors’ sentiment in the Thai market, which has already been under selling pressure from profit taking,” Andy Jenwipakul, the head of research at SCB Securities Co. said by phone today. “The impact on economy and human lives will probably be a lot less than the 2004 as the preparation and warning systems are much better.”

Adani Enterprises Ltd. (ADE) and Tata Power Co. (TPWR), which own stakes in Indonesian coal mines, sank at least 2 percent in India.

To contact the reporter on this story: Yudith Ho in Singapore at yho35@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net


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